What Should Be the Attitude of the State Toward the Business of Fire Insurance?

What Should Be theAttitude of the StateToward the Businessof Fire Insurance?Delivered at Meeting of NationalAssociation of Local Fire Insurance Agentsin Cincinnati, Ohio, on October 15, 1913byWilliam Temple Emmet

What Should Be the Attitude of the State Toward the Business of Fire Insurance?

Delivered at Meeting of National Association of Local Fire Insurance Agents in Cincinnati, Ohio, on October 15, 1913

by William Temple Emmet

Excerpt

I know of no more interesting present-day problem than that which has grown out of the efforts that are now being made, in many parts of the United States, to fix and control fire insurance rates by governmental action. Of course, it is only a single phase of a very large movement that is in progress throughout the civilized world looking toward the strengthening of governments in their powers of control over private business. But, from certain points of view, the business of fire insurance seems, in a very particular sense, to be one which can be better conducted by private individuals than by even 'the most perfect governmental machinery. It seems to possess certain features which make it a particularly dangerous, field for the people in their organized capacity to attempt to enter. A good many kinds of business lend themselves quite easily to the designs of those who would like to see a socialistic State established here with the least possible delay. The idea of governmental operation pre — sents no insurmountable difficulties in a number of cases. But in the case of fire insurance, our present — day reformers and radical thinkers, bent on driving private capital out of the field and leaving this in the exclusive control of government, are confronted upon-the threshold by unusual obstacles which are inherent to the business itself, and few suggestions have yet been made, of a practical nature, respecting the manner in which these obstacles can be avoided. Notwithstanding all this, however, it is no overstatement to say that, at the present time, a very formidable and aggressive movement is on foot, having for its ultimate purpose the virtual transaction of the business of fire insurance by government.

What is the peculiar feature of the fire insurance business which makes the problem of State participation in this business a more difficult one than the corresponding problem in the case of railroads. For instance, or of water companies, or of telegraphand telephone companies? Well, broadly speaking, what I refer to is of course the fact that fire insurance has always been, and must always be, to an extent not approached by any other legitimate business I know of, a game of chance pure and simple — a game of chance in which men who are qualified by temperament and experience to play it, and who are willing to risk their money in it, can survive, but in which none but experts can with any safety engage. If it were not that the word has acquired a sort of invidious meaning which makes it unsafe to use it in connection with any legitimate business, I should be inclined to use the word gambling in trying to describe the exact feature of the business of fire insurance that I am referring to. It would be obviously improper, however, to attempt to completely charac — terize by any such word a business so beneficial to the entire world as the business of fire insurance is when it is properly conducted. But that the uncertainties and extraordinary hazards which attach to all games of chance enter into the transaction of this business to a very remarkable degree, cannot be denied. It is this element in fire insurance which seems to require that it shall remain in competent private hands longer than most other kinds of enterprise 4 for I am assuming that all of us will agree that the State is no fit agency for the transaction of business into which the element of chance and guess-work enters to any abnormal extent.